A Firm Notices That When It Increases Output Beyond an Initial

question 1

Multiple Choice

A firm notices that when it increases output beyond an initial level $Q _ { 1 }$ , average total cost decreases. For this firm, the region of output beyond $Q _ { 1 }$ is characterized by

• A) economies of scale.
• B) diseconomies of scale.
• C) constant economies of scale.
• D) the minimum efficient scale.

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Definitions:

Competitive Quantity

is the quantity of goods produced or services offered based on the equilibrium in a competitive market.

Wage Rate

The fixed amount of compensation or payment received by an employee from an employer in exchange for work performed.

Market Quantity

The total amount of a good or service that is bought and sold in a market.

Marginal Expenditure

The additional cost incurred by producing one more unit of a good or service.